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Sunday, January 29, 2012

MegaUpload: The SOPA/PIPA Aftermath

The heart of this case is whether and when an enterprise can be held criminally liable for the conduct of its users. ....... “Can the Grokster theory of CIVIL liability even be the basis for CRIMINAL copyright claims?” This has never been decided by any Court. ...... Rojadirecta’s lawyers at Durie Tangri have challenged the U.S. Government’s assertion that criminal liability arises from linking to infringing content. The lawyers argue that judge-made secondary infringement liability theories, including Grokster style inducement, cannot be the basis for a criminal copyright violation because the criminal copyright statute doesn’t mention secondary liability. Congress considered and rejected statutes that would have created such liability, in COICA and PROTECT IP. In sum, due process doesn’t allow incarceration under a civil legal theory that the Supreme Court dreamed up in 2005. The issues yet to be decided in Rojadirecta apply to the Megaupload case as well. ...... The list of overt acts show that the object of the conspiracy was infringement by Mega users. ....... If the idea is that Mega conspired with its users to infringe, those users may or may not have been criminally infringing copyright. They were located all over the world, and may or may not have acted willfully, i.e. intended to violate U.S. law. Again, the government would basically have alleged an agreement to violate a U.S. CIVIL law, including by many people who are not subject to U.S. rules. ....... Is it a federal crime to conspire to induce others to violate a U.S. civil law? ....... The answer to that is an obvious “no”. ...... prosecuting this case against Mega, especially if Defendants get good criminal lawyers who also understand copyright law, is going to be an uphill battle for the government. ..... the indictment identifies four films that the defendants supposedly distributed before release: The Green Hornet, Thor, Bad Teacher, Twilight–Breaking Dawn Part 1. But Count 4 only charges one such act of prerelease infringement, the movie Taken. What about the other films? Why were those not also charged? .......... Finally, this case is extremely interesting from a JURISDICTIONAL standpoint. One of the very first issue to be litigated will be extradition to the United States. Does the United States have jurisdiction over anyone who uses a hosting provider in the Eastern District of Virginia? What about over any company that uses PayPal? That’s a very broad claim of power, and I expect it will be vigorously contested.

While last week’s shutdown of MegaUpload is of huge interest in itself, but a wave of aftershocks and side-effects are proving equally fascinating to watch. In addition to causing all sorts of problems for legitimate users of file-sharing services, there is no avoiding the fact that certain elements of the piracy scene are in a mess. But amazingly, still the beat goes on. ....... The perception of the established ground rules had been changed, without the passing of a single new law. ....... “If the US government can come for Kim Dotcom it can happen to almost anyone,” a file-hosting operator told TorrentFreak on condition of anonymity. “I’m trying to think of everything I did possibly wrong in the last 3 years and worrying about that and the next 3 years also, if we even have that long.” ..... For many hosting sites it was time to react – quickly. ......... drastic actions taken by services such as Filesonic and Fileserve who shut down all 3rd party sharing and, like many others, closed down their affiliate payout programs ...... file-hosting competitors such as 4shared, Rapidshare and Hotfile had grown as users hunted for spare capacity ...... huge libraries of both legitimate and pirated material were wiped out as filehost after filehost deleted an impossible-to-calculate number of files and closed down thousands of suspected infringing accounts. ....... For more than half a decade Hollywood and the recording industry have spent millions of dollars not so much on actually eliminating illegal content, but getting rid of links to content such as those found on BitTorrent........ But this week, without a single cease and desist being sent, cyberlockers across the globe not only self-deleted vast quantities of files, but in doing so made millions of links across thousands of ‘linking sites’ completely useless too. ......... While there is money to be made in torrent sites, the content sharers there are largely altruistic. ...... But like worker ants whose nest has just been smashed apart by angry humans, others are utterly unfazed and just want to know which hosts are still paying out. Despite the climate of fear, quite a few hosts say they are ...... Cyberlockers are in a mess, but already recovering. Release sites are continuing, albeit with a reduced number of multiple links to the same content. ...... Perhaps the best test is whether it’s now very hard or impossible to find and download popular content. Not even close.

This MegaUpload stuff is related to SOPA/PIPA. The people who lost the battle in Congress hit back in New Zealand. There is no fighting the technology. But the music and movie industries have the option to come up with new business models.